LO and Big Layoffs LO5426

Wed, 7 Feb 96 17:26:00 GMT

Replying to LO5343

> I have just finished reading Goldratt's latest book, _It's Not Luck_,
> and I think he hit it right on the head when he described the use of
> downsizing, rightsizing, inside-out sizing as often an example of those
> in leadership positions taking the easy way out. I like his idea that we
> need to learn how to make use of the resources we have and find ways to
> sustain the life of the organizations--and the employees who give them
> life--for which we have assumed stewardship.

There are (at least) two possibilities why manager down- or rightsize
their companies - with the aim to improve their ROI what may be used in
most For Profit organizations as measurment of the management performance:

Manager may they see no way how to develop their business further, what
includes that there may not exist a way to develop it futher, or they may
lack the ability to do so.

Hamel and Prahalad in their book _Competing for the Future_ seems to tend
to the later answer - that the businesses and industries can and must be
developed further, to secure the future of the company. However, the
examples used by Hamel and Prahalad seems to be part of younger industries
forced by a fast technology development, like telecommunication of IT
general. The other point is that they use examples of major multinational
companies, leader in their industries, who may have the potential to
change the rules of the game with new innovations.

But what is with older industries like the oil- and refining business, or
like the chemical industry where most products are commodities? Is it not
possible that there may not exist further development areas, at least in
the medium term? Maybe there will be interesting innovations in the long
run also in those areas, but I assume that those innovations will need a
high capital exposure, what may mean that it this way is impossible for
smaller companies.

I think that there is no general answer to the question if there is the
general possibility to develop every business further or not. But I am
also convinced that the general answer cannot only be to downsize and
restructure every business. Even if it may not be possible for every
company to be the leader, but to be the follower in their industries, then
it should be possible to run the best possible strategy to improve at
least the strategic position in the existing business. Combined with using
the tools of the learning organization, running an appropriate strategy
should be enough to gain a sustainable competitive advantage, until the
whole industry is substituted by the next technology generation.

Wolfgang Schmid
e-mail: ws2@student.open.ac.uk
Compuserve: 100101.3210@Compuserve.com ($!!)

company address: OMV AG Raffinerie Schwechat Mannswoertherstrasse 28 A-2320 Schwechat Austria/Europe

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